The Moderating Effect of Brand- inertia on the Relationship Between Switching Cost and Loyalty Hsiu-Yuan Tsao Takming University of Science and Technology.

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Presentation transcript:

The Moderating Effect of Brand- inertia on the Relationship Between Switching Cost and Loyalty Hsiu-Yuan Tsao Takming University of Science and Technology Taiwan

ABSTRACT concept of brand-inertia serves for examining previous research into the impact of satisfaction and switching on loyalty A web questionnaire is used with Yahoo web mail users. Therefore, this study suggests that the strategy of raising the switching cost to prevent brand switching behavior is effective only with low brand-inertia consumers.

The Impact of Satisfaction and Switching Cost on Loyalty (Cont.) Most researchers express little doubt about the positive role of satisfaction on the formation of loyalty. However, some do doubt whether high switching cost universally makes for consumer loyalty and diminishes the relationship between core-service satisfaction and repurchase intentions.

Brand Inertia brand loyal brand-inertiaOdin (2001) describes consumers who attach great importance to brands of choice (high brand sensitivity) as brand loyal, and considers any repeat purchasing behavior under conditions of weak brand sensitivity as brand-inertia. Repeat Purchase Behavior Strong Brand Sensitivity Low Brand Sensitivity Loyalty Inertia

Conceptual Model and Hypotheses H1: The higher the satisfaction, the higher the loyalty. H2: The higher the switching cost, the higher the loyalty. H3: The lower the brand- inertia, the stronger the impact of switching cost on loyalty H4: The lower the brand- inertia, the stronger the impact of the satisfaction on loyalty H4 H3 H2 H1 Satisfaction Switching Cost Brand Inertia Loyalty

Research Methodology Between September and November 2006, we directed a randomly selected 1000 Yahoo mail users to a web questionnaire of our design, issuing three reminders and offering five USB flash drives as prizes. The percentage of completed, usable responses was around 18%.

Measures The measures were validated items used by previous researchers: –satisfaction with online services and cost for switching between web sites were evaluated by questions adapted from Anderson and Srinivasn (2003) –the concept of brand-inertia was evaluated by three questions adapted from Odin (2001)

Results LOYALTY Table 1. The Result of Regression Analysis on LOYALTY GroupR2R2 BP-Value High Brand Inertia * Satisfaction * Switching Cost Low Brand Inertia ** Satisfaction ** Switching Cost ** **:<0.005 * :<0.05 B:Standard coefficient

Results (Cont.) H1: The higher the satisfaction, the higher the loyalty. (SUPPORT) H2: The higher the switching cost, the higher the loyalty. (SUPPORT) H3: The lower the brand-inertia, the stronger the impact of switching cost on loyalty (SUPPORT) H4: The lower the brand-inertia, the stronger the impact of the satisfaction on loyalty (REJECTED)

The Moderating Effect of Brand Inertia on the Relationship of the Switching Cost and Loyalty Low High Switching Cost Satisfaction HighLow Brand Inertia The impact on Loyalty That is, for those attaching great importance to brands of choice, the relationship of high switching cost to loyalty is stronger. Therefore, this study suggests that the strategy of raising the switching cost to prevent brand switching behavior is effective only with low brand-inertia consumers.